Why do investors own the SPDR S&P/ASX 200 ESG Fund?
The SPDR ASX 200 ESG ETF provides investors with exposure to the largest 200 Australian/ASX-listed companies while also being tilted towards companies which exhibit strong Environmental, Social and Governance (ESG) characteristics — and E200 excludes companies in tobacoo and controversial weapons and those which earn more than 5% of their revenue from thermal coal.
According to our most recent data, the E200 ETF had $34.96 million of money invested. Given its funds under management (also known as FUM or ‘market cap’) is less than $100 million, you should consider if this ETF is still too small and if it is sustainable for the ETF issuer. At Best ETFs we say an ETF with more than $100 million invested is typically more sustainable than one with less than $100 million (at least). However, there are exceptions to this general rule, especially if the ETF issuer/provider is reputable and committed to growing the ETF’s FUM through effective marketing strategies and distribution to financial advisers.
Fees to consider
According to our numbers, the annual management fee on the E200 ETF is .13%. The issuer, SPDR, collects this fee automatically.
Meaning, if you invested $2,000 in the E200 ETF for a full year you could expect to pay management fees of around $2.60. This fee is different from the fee you pay to your brokerage provider (e.g. CommSec, NabTrade, SelfWealth, etc.), which is the fee to buy or sell the ETF. In addition to a management fee charged by the issuer, be mindful to check the ‘spread‘ for the ETF.
A fee comparison
Fees aren’t the only key consideration for ETF investors, but it’s an easy thing to do. To understand if the ETF you’re looking at is too costly, compare it with other ETFs from the same sector, and against the industry average. For example, the average management fee (MER) across all of the ETFs covered by the Best ETFs Australia team was 0.51%, which is $10.20 per $2,000 invested. Keep in mind that small changes in the fees paid can make a big difference after 10 or 20 years. You should read the E200 Product Disclosure Statement (PDS), available on the ETF issuer’s website, because it will detail the fees, tax implications and the latest information.
Don’t stop here, to get our full E200 ETF review, click through to this ETF review page now.
VanEck Vectors MSCI International Sustainable Equity ETF
The VanEck ESGI ETF provides exposure to sustainable international companies not including Australian or fossil fuel stocks.
With our numbers for July 2022, ESGI’s FUM stood at $125.14 million. Since the ESGI’s FUM is over $100 million, our investing team would say the ETF has met our minimum criteria for the total amount invested, otherwise known as FUM. A very sustainable ETF in the Index sector should be able to scale well and become profitable for the ETF issuer.
A look at the ESGI ETF fee load?
VanEck, the ETF issuer, charges a yearly management fee of 0.55% for the ESGI ETF. Meaning, if you invest $2,000 for a full year from now you can expect to pay a management fee of around $11.00.
The management fee is above the average for all ETFs on our list of ASX ETFs, but keep in mind the ETF may be able to justify the higher price tag with superior performance over time.
To discover more facts about the ESGI ETF, read our free ETF investment report.
So how can you actually invest the ESGI ETF? By getting a free brokerage account with Pearler. If you join Pearler in the month of Nov 2022, with your free Pearler account you can buy the ESGI ETF and pay $0 in brokerage fees. All you have to do is buy and hold the ETF for 12 months.
You can invest as little as $500 in the ESGI ETF to take-up this offer. Sounds pretty good, right? To invest in ESGI for $0 brokerage, simply click here to visit Pearler’s website and sign up.
